Financial Services for the Underserved Act of 2016

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Financial Services for the 
Underserved Act of 2016''.

SEC. 2. AMENDMENTS RELATING TO CREDIT UNION SERVICE TO UNDERSERVED 
              AREAS.

    (a) In General.--Paragraph (2) of section 109(c) of the Federal 
Credit Union Act (12 U.S.C. 1759(c)(2)) is amended to read as follows:
            ``(2) Exception for underserved areas.--
                    ``(A) In general.--Notwithstanding subsection (b), 
                the Board may approve an application by a Federal 
                credit union to allow the membership of such credit 
                union to include any person or organization whose 
                principal residence or place of business is located 
                within a local community, neighborhood, or rural 
                district if--
                            ``(i) the Board determines--
                                    ``(I) at any time after August 7, 
                                1998, that the local community, 
                                neighborhood, or rural district taken 
                                into account for purposes of this 
                                paragraph is an underserved area (as 
                                defined in section 101(10)); and
                                    ``(II) at the time of such 
                                approval, that the credit union is well 
                                capitalized or adequately capitalized 
                                (as defined in section 216(c)(1)); and
                            ``(ii) before the end of the 24-month 
                        period beginning on the date of such approval, 
                        the credit union has established and maintains 
                        an ongoing method to provide services in the 
                        local community, neighborhood, or rural 
                        district.
                    ``(B) Termination of approval.--Any failure of a 
                Federal credit union to meet the requirement of clause 
                (ii) of subparagraph (A) by the end of the 24-month 
                period referred to in such clause shall constitute a 
                termination, as a matter of law, of any approval of an 
                application under this paragraph by the Board with 
                respect to the membership of such credit union.
                    ``(C) Annual credit union reporting requirement.--
                Any Federal credit union which has an application 
                approved under this paragraph shall submit an annual 
                report to the Administration on the number of members 
                of the credit union who are members by reason of such 
                application and the number of offices or facilities 
                maintained by the credit union in the local community, 
                neighborhood, or rural district taken into account by 
                the Board in approving such application.
                    ``(D) Publication by administration.--The 
                Administration shall publish annually a report 
                containing--
                            ``(i) a list of all the applications 
                        approved under this paragraph prior to the 
                        publication of the report;
                            ``(ii) the number and locations of the 
                        underserved areas taken into account in 
                        approving such applications; and
                            ``(iii) the total number of members of 
                        credit unions who are members by reason of the 
                        approval of such applications.''.
    (b) Underserved Area Defined.--Section 101 of the Federal Credit 
Union Act (12 U.S.C. 1752) is amended--
            (1) by striking ``and'' at the end of paragraph (8);
            (2) by striking the period at the end of paragraph (9) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(10) the term `underserved area'--
                    ``(A) means a geographic area consisting of a 
                single census tract or a group of census tracts, each 
                of which meets the criteria for--
                            ``(i) a low-income community, as defined in 
                        section 45D(e) of the Internal Revenue Code of 
                        1986; or
                            ``(ii) is underserved, based on data of the 
                        Board and the Federal banking agencies (as 
                        defined in section 3 of the Federal Deposit 
                        Insurance Act), by other depository 
                        institutions (as defined in section 19(b)(1)(A) 
                        of the Federal Reserve Act); and
                    ``(B) notwithstanding subparagraph (A), includes, 
                with respect to any Federal credit union, any 
                geographic area within which such credit union--
                            ``(i) has received approval to provide 
                        service before the date of the enactment of 
                        this paragraph from the National Credit Union 
                        Administration; and
                            ``(ii) has established a service facility 
                        before such date of enactment.''.
    (c) Conforming Amendment.--Section 109(e)(2) of the Federal Credit 
Union Act (12 U.S.C. 1759(e)(2)) is amended by inserting ``subsection 
(c)(2) and'' after ``provided in''.

Summary: Financial Services for the Underserved Act of 2016 This bill amends the Federal Credit Union Act to revise the requirements for allowing a federal credit union to extend its field of membership in an underserved area. The credit union must be well capitalized or adequately capitalized, and within 24 months after approval by the National Credit Union Administration (NCUA) it must have established and maintained an ongoing method to provide services in the local community, neighborhood, or rural district. (The current requirement is that the credit union must, without a deadline, establish and maintain an office or facility in the local community, neighborhood, or rural district at which credit union services are available.) Any failure of a federal credit union to meet the latter requirement by the end of the 24-month period shall constitute a termination, as a matter of law, of NCUA approval of its application regarding the credit union's membership. Any federal credit union with an approved application for an underserved area must report annually to the NCUA on the number of:  credit union members who are members by reason of that application; and  offices or facilities maintained by the credit union in the local community, neighborhood, or rural district taken into account by the NCUA in approving the application.  The bill defines &quot;underserved area&quot; generally as a geographic area consisting of a single census tract or a group of census tracts, each of which meets the criteria for a low-income community or is underserved by other depository institutions, based on data of the NCUA and the federal banking agencies.