Community Bankers Blast Navy Federal’s Operation of Overseas Military Banking Program

The Independent Community Bankers of America in Washington, D.C. blasted Navy Federal Credit Union’s announcement on Tuesday for cobranding the overseas military banking program, claiming it will conflate a bank with a credit union and create confusion among servicemembers.

Last September, the Department of Defense (DoD) awarded Navy Federal a contract to manage the Overseas Military Banking Program (OMBP), known as “Community Bank.” The program was previously operated by Bank of America. The credit union announced on Tuesday that the overseas Military Banking Facilities (MBFs) have been co-branded as “Community Bank, Operated by Navy Federal Credit Union.”

“The Federal Deposit Insurance Corp. and National Credit Union Administration should immediately issue cease-and-desist orders directing the $170 billion-asset institution not to refer to itself as a bank,” ICBA President/CEO Rebeca Romero Rainey said in a prepared statement. “Cease-and-desist orders from the FDIC and NCUA are in line with NCUA legal guidance that has determined that federal law does not explicitly permit insured credit unions to refer to themselves as banks or banking organizations. Although credit unions may like to present themselves as banks, federal agencies should ward off any attempts to conflate a bank with a credit union, which would likely result in confusion among servicemembers.”

However, in an October 2023 expert opinion column written by then-Navy Federal President/CEO Mary McDuffie, she noted that the OMBP contract means the credit union is precluded from promoting its own products and services at Community Bank.

Navy Federal is responsible for operating 60 MBFs and 272 ATMs already in service on designated DoD military installations in 10 nations across Europe and the Pacific. MBFs provide access to foreign currency, local ATMs, bill pay, savings, checking and other financial services to installation personnel and commands.

Although Navy Federal is managing these MBFs overseas, the credit union and the DoD’s Community Bank will remain as separate entities, including on military installations where both institutions operate.

“The Overseas Military Banking Program fits our core values at Navy Federal and is consistent with our primary mission of supporting active-duty military members and their families,” Navy Federal COO Kara Cardona said in a prepared statement. “Serving these families through this important DoD program is directly aligned with our mission.”

Navy Federal did not specifically comment on the ICBA’s statement when reached by CU Times, only referring to the credit union’s prepared statement about officially taking over the management of the MBFs and a FAQs document.

READ MORE: Navy Federal FAQs document regarding the DoD’s Overseas Military Banking Program.