NCUA Unveils Revised Charter Process

NCUA lobby.

The NCUA on Thursday unveiled a new process designed to make it easier to set up new credit unions.

New from NCUA Charter Application Guide and other resources have been created to help people who want to bring federally insured financial services to their communities by starting an entirely new — or de novo — federal credit union.

“In addition to increasing access to safe, fair and affordable financial products and services for credit union members, there is a real need to make the process of starting a new credit union less daunting,” said said NCUA President Todd Harper. “Organizing a new credit union takes time, resources and commitment. A clear, step-by-step roadmap to applying for a federal charter helps organizers lay the foundation for success.

The new guide was developed as part of NCUA’s Advancing Communities through Credit, Education, Stability, and Support (ACCESS) initiative.

Launched in 2020, this initiative was designed to foster greater economic equity and justice through the modernization of regulations, policies and programs that support financial inclusion within the NCUA and more broadly across the system. credit unions. A key element of ACCESS is to support the development of new credit unions.

Harper thanked everyone at the NCUA who worked on the project, including NCUA Board Member Rodney E. Hood “for starting the ACCESS initiative,” and Vice President Kyle S. Hauptman for “his unwavering focus on new charters”.

Todd Harper Todd Harper (Source: NCUA)

Hauptman said the chartering process has been one of his top three priorities and the guide is an example of the NCUA “really ‘talking the talk’ on financial inclusion.”

“If we force a community to jump through unnecessary hurdles or make it wait even a day longer than necessary, the NCUA is not living up to its own ideals.”

Hood said the guide is a milestone, but more are yet to come. “In the months ahead, I look forward to working with my board colleagues to do even more to significantly streamline and simplify the charter process,” Hood said.

A next step is a webinar the NCUA is hosting at 2 p.m. EDT on Wednesday, May 4, to provide information for those interested in starting a new federal credit union on the process and requirements. Registration for the free one-hour webinar is on this link.

During the hour-long webinar, staff from NCUA’s Office of Credit Union Resources and Expansion will explain the charter process, discuss the new guide, and introduce other resources.

NAFCU and CUNA encourage simplification of the chartering process. Last July, CUNA President and CEO Jim Nussle sent a letter to Congress supporting a bill to remove unnecessary regulatory hurdles that impede the creation of new credit unions and other financial institutions.

Nussle wrote that the number of de novo credit unions has fallen from an average of 7.7 per year before the Great Recession of 2007-2009 to an average of 2.2 per year since the implementation of the Dodd Act. -Frank on Wall Street reform and consumer protection. 2010.

Dodd-Frank was a sweeping overhaul of regulations on banks, credit unions, and other financial institutions passed in response to the 2007 financial crisis triggered by lax regulation of financial institutions, particularly asset-backed securities where the assets were pools of high interest rate securities – subprime mortgages.

“Chartering a credit union is a long and complex undertaking – including identifying sources of capital, determining the area of ​​membership, developing a business plan, appointing a board of directors,” Nussle wrote. “(The) NCUA offers consulting services at no cost once a preliminary field of membership is approved. But it can still take three years or more to receive a charter.

Regardless of the complexity of obtaining a charter, small credit unions face a survival challenge and many are acquired by larger institutions every year. As of Dec. 31, nearly three-quarters of the $2.08 trillion in assets of the nation’s 5,048 credit unions were controlled by the 411 with assets of $1 billion or more.

Since the start of 2019, the NCUA has licensed seven de novo credit unions:

1. Unit of Eatonville Federal Credit Union of Eatonville, Fla., six miles north of Orlando, was chartered last December. It has a low-income designation and will primarily serve people who live, work, worship, attend school, or participate in programs aimed at alleviating poverty or distress in the Eatonville community. Harper called the charter a milestone. “Eatonville was incorporated in 1887 and was one of the first self-governing all-black municipalities in the United States.” He has not yet filed an appeal report.

2. Capital Federal Credit Union in Lubbock, Texas ($6.1 million in assets, 29 members as of Dec. 31) was chartered on Oct. 21, 2021 to serve a multi-bond membership scope that includes: employees of Capital Mortgage Services of Texas; members of the United Latin American Citizens League in Lubbock; Texas Council #263 and an underserved part of Lubbock County consisting of 39 census tracts.

3. Community First Fund Federal Credit Union of Lancaster, Pennsylvania ($3 million) was chartered in July 2021 to serve the 550,000 residents of Lancaster County, about 80 miles west of Philadelphia. It had gained 60 members by March 31.

4. Maun Federal Credit Union in Kendall Park, NJ ($708,871, 38 members) was chartered April 26, 2021 to serve a local Islamic community.

5. Growing Oaks Federal Credit Union of Goldsby, Okla. ($2.5 million, 88 members) chartered August 7, 2020 to serve four counties in the state.

6. Maine Harvest Federal Credit Union in Unity, Maine ($2.9 million, 74 members) was mapped on August 14, 2019 to serve the employees and 13,000 members of the Maine Organic Farmers and Gardeners Association and the Maine Farmland Trust.

7. Otoe-Missouria Federal Credit Union of Red Rock, Okla. ($2.2 million, 470 members) was chartered in May 2019 to serve the 4,200 Otoe-Missouria Tribe members and employees as well as 17 tribal-owned businesses.

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