Community Credit Union Charter Overview

Learn about the Community Charter and its components along with the Field of Membership opportunities it could offer your credit union.

CUCollaborate Staff


Feb 14



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CUCollaborate Staff

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CUCollaborate Staff

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Learn about the Community Credit Union Charter and its various components along with the Field of Membership opportunities it could offer your credit union.

Types of Community Charters and Basic Requirements

As outlined in the National Credit Union Administration (NCUA)’s Chartering and Field of Membership (FOM) Manual, there are two types of federal community charters: the first is “based on a single, geographically well-defined local community or neighborhood,” while the second covers a likewise well-defined “rural district.” Given these guidelines, it should be noted that a single community may be served by multiple credit unions.

Within these distinctions, the NCUA Manual describes four types of potential “affinities” on which field of membership can be based: “[P]ersons who live in, worship in, attend school in, or work in the community or rural district.” In addition, businesses and other legal entities may qualify for membership permitted they lie within the prescribed boundaries.

The Manual further lays out the following criteria for community charters:

1) The geographic area’s boundaries must be clearly defined; and

2) The area is a well-defined local community or a rural district.

What Counts as a Well-Defined Local Community?

“Well-defined” in this context simply means that the proposed area has specific geographic boundaries, which could refer to any of the following: “a city, township, county (single, multiple, or portions of a county) or a political equivalent, school districts, or a clearly identifiable neighborhood.”

In order to add a local community to its FOM, a credit union must prove to the NCUA the proposed area meets the above criteria. To do so, it has the following options:

Adding Presumptive Communities

The “well-defined” requirement for a local community can be met first and foremost by establishing that an area meets the standard of a “presumptive community.” In this instance, a credit union will not bear the burden of having to establish common interests or interaction within the community, provided the area to be served qualifies as one of the following:

A recognized Single Political Jurisdiction, i.e., a city, county, or their political equivalent, or any single portion thereof (an entire State, however, does not qualify as a single political jurisdiction under the rules).

A Statistical Area, defined by the NCUA as: “all or an individual portion of a Combined Statistical Area (CSA) or a Core-Based Statistical Area (CBSA) designated by the U.S. Census Bureau, including a Metropolitan Statistical Area. To meet the well-defined local community requirement, the CSA or CBSA or a portion thereof, must be contiguous and have a population of 2.5 million or less people. An individual portion of a statistical area need not conform to internal boundaries within the area, such as metropolitan division boundaries within a Core-Based Statistical Area."

Or, lastly, the area is a Previously Approved Community, having been already designated as a well-defined local community by the NCUA.

NB: A Rural District (covered below) also qualifies as a presumptive community.

Adding Non-Presumptive Communities

Since a 2018 NCUA ruling intended to make the approval, expansion and conversion application process for community charters more flexible, credit unions also have the option to add bordering areas beyond a presumptive community, provided they show “Compelling Evidence of Common Interests or Interaction.”

To do this, an institution must use what is called a “Narrative Application,” essentially submitting a written statement with sufficient supporting documentation to clearly establish the existence of a well-defined local community as proven by the interactions or shared common interests of the area’s residents.

The application must further show the institution has:

1) The ability to serve the requested community; and

2) The intent to serve the entire community and all of its segments.

In instances where a credit union submits a narrative application for a community of multiple political jurisdictions with a total population greater than 2.5 million people, an “Open Hearing” will be held by the Office of Credit Union Resources and Expansion, and interested parties will be asked to comment on the proposed expansion before a decision is reached.

What Counts as a Well-Defined Rural District?

A Rural District differs from a Local Community mainly in its ability to cover larger, less-densely populated swathes of land. Areas of any geographic size may qualify provided they meet each of the following criteria set forth in the Manual:

–The proposed district has well-defined, contiguous geographic boundaries;

–The total population of the proposed district does not exceed 1,000,000;

–Either more than 50% of the proposed district's population resides in census blocks or other geographic units that are designated as rural by either the Consumer Financial Protection Bureau or the United States Census Bureau, OR the district has a population density of 100 persons or fewer per square mile; and

–The boundaries of the well-defined rural district do not exceed the outer boundaries of the states that are immediately contiguous to the state in which the credit union maintains its headquarters (i.e., not to exceed the outer perimeter of the layer of states immediately surrounding the headquarters state).

Examples of Community Charter Fields of Membership

The NCUA Manual outlines what sample community fields of membership might look like:

–Persons who live, work, worship, or attend school in, and businesses located in the area of Johnson City, Tennessee, bounded by Fern Street on the north, Long Street on the east, Fourth Street on the south, and Elm Avenue on the west;

–Persons who live or work in Green County, Maine;

–Persons who live, worship, work (or regularly conduct business in), or attend school on the University of Dayton campus, in Dayton, Ohio;

–Persons who work for businesses located in Clifton Country Mall, in Clifton Park, New York;

–Persons who live, work, or worship in the Binghamton, New York, Core Based Statistical Area, consisting of Broome and Tioga Counties, New York (a qualifying Core Based Statistical Area in its entirety);

–Persons who live, work, worship, or attend school in the portion of the Oklahoma City, OK Metropolitan Statistical Area that includes Canadian and Oklahoma counties, Oklahoma (two contiguous counties in a portion of a qualifying Core Based Statistical Area that has seven counties in total); or

–Persons who live, work, worship, or attend school in Uinta County or Lincoln County, Wyoming, a rural district.

Conversely, it provides examples of FOMs that do not meet the “well-defined” status:

–Persons who live or work within and businesses located within a ten-mile radius of Washington, DC (not a permitted community);

–Persons who live or work in the industrial section of New York, New York. (not well-defined nor a permitted community); or

–Persons who live or work in the greater Boston area. (not well-defined).

–Persons who live or work in the State of California. (not a permitted community).

–Persons who live in the first congressional district of Florida. (not a permitted community).

Can an Entire State Count as a Local Community or Rural District?

There are certain entire states that technically meet the definition of either a local community or rural district, and the Federal Credit Union Act itself does not explicitly rule out including one such area in a field of membership. However, as noted above, the manual specifically cites "persons who live or work in the State of California" as not meeting the well-defined threshold, and it is our understanding that the NCUA currently interprets this language as precluding any entire state from qualifying.

The Application Process

While a Community Charter can be greatly beneficial to many credit unions looking to expand or convert an existing charter, it is by no means a not a one-size-fits-all process. Identifying the best strategy for your credit union can be both difficult and time-consuming. At CUCollaborate, we provide a tailored approach to growth based on data-driven insights and specialized software to help credit unions reach the largest target market possible.

Learn more about our Field of Membership Consulting Services.

Field of Membership Expansion

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