An analysis of FOM expansions by charter types and potential members added across the third quarter of 2022.
Each quarter, the NCUA’s Office of Credit Union Resources and Expansion publishes data on changes in federal credit unions’ (FCU) fields of membership (FOM), whether via expansion, conversion, or merger. The Merger Activity and Insurance Report includes both a broad industry overview and detailed data on individual credit unions, which can at times reveal the outsized role of a few institutions.
Background on Field of Membership
At the federal level, fields of membership (often also called charters) may be classified as (1) community, or residentially-based, charters; (2) single common bond charters (SCBs), either occupational or associational; or (3) multiple common bond charters (MCBs), which may combine either or both occupational and associational common bonds.
Community charters may, within some constraints, expand the geographic size of their FOMs. SCBs may expand their FOMs by adding other single common bonds (commonly called Select Employee Groups (SEGs)), thereby becoming MCBs. In turn, multiple common bond credit unions may also add further SEGs and, very importantly, underserved areas.
FCUs may convert across community, SCB, and MCB charters. In doing so a newly converted community charter would give up its field of membership outside of its geographic FOM. Similarly, an FCU abandoning a community charter would give up its geographic FOM in exchange for its adopted SEGs. Conversions, however, do not affect current members, who are protected by the “once a member, always a member” rule.
Community Charter Expansions and Conversions
From July through September of this year, a total of ten federal credit unions expanded an existing community charter, while two others converted to a community charter. Together, this activity led to the addition of 9.1 million potential new members.
The expansions naturally led to the greatest number of new members, accounting for 7.6 million, with an average of 763,866 and nearly identical median of 739,434 across the additions. Of the ten expansions, six were rural district additions, while the remaining four were local communities.
Highlighting this activity was Allegiance Credit Union, located in Oklahoma City, Oklahoma, which added a combined statistical area (CSA) to increase their FOM by 1.5 million potential members.
The two FCUs that converted to a community charter this past quarter added a combined total of 1.4 million new members, for both an average and median of 723,504. Leading the way was Route 31 Credit Union in Muskegon, Michigan, which gained 916,189 potential new members through its conversion and accompanying rural district addition.
By comparison, over the second quarter of 2022, 15 credit unions expanded a community charter, together adding 15.2 million potential members, with an average of 906,535 and median of 992,293 across the additions. There were no conversions to a community charter within that same time frame.
Select Employee Group Additions
Single Common Bond
SEG additions by single common bond credit unions were once again rare across this most-recent quarter. In total, three credit unions added four groups accounting for 38,392 potential members overall, with an average of 9,598 and median of 1,578. The groups themselves were evenly split between occupational and associational.
The majority of these potential members came through Kaiperm Credit Union of Oakland, California adding an occupational group with 35,136 members to account for over 90% of the overall tally.
These numbers represent a marginal increase over the previous quarter, in which a single credit union added one occupational group for 25,000 potential new members.
Multiple Common Bond
Multiple common bond credit unions were far more active across the third quarter of 2022, with 17 institutions adding a total of 22 select employee groups. Of these, occupational groups made up a slight majority with 13, while the remaining nine were associational groups.
Overall, the combined activity led to 1.6 million potential new members, with an average of 73,268 and median of 9,136 across additions. Digging deeper, the difference in the numbers between associational and occupational groups was stark, with the former accounting for 92.5% of potential members at 1.5 million in total. Occupational groups, meanwhile, despite making up the majority of the overall additions, totaled just 121,003 potential new members.
Naturally then, the credit unions adding the most potential new members all did so via associational groups, as Security Service FCU in San Antonio, Texas; Credit Union of New Jersey in Ewing, New Jersey; Education First FCU in Beaumont, Texas and New England FCU in Williston, Vermont each added a group from the American Consumer Council to attain over 328,000 potential new members respectively.
These overall numbers represent a solid increase compared to the year’s second quarter, in which 11 MCB credit unions added 16 SEGs for a total of 800,834 potential new members, with an average of 50,052 and median of 16,500 across the additions. Associational groups also led to significantly more potential new members over this time span.
Underserved Area Additions
Five MCBs added a total of eight underserved areas to their fields of membership across this past quarter. Together, the additions led to 3.1 million potential new members with an average of 392,216 and median of 245,509 for each area addition.
The biggest mover of the bunch was Family Trust FCU, based in Rock Hill, South Carolina, which added one CSA along with one core-based statistical area (CBSA) to attain 1.8 million potential new members and account for more than half of the quarter’s totals.
A map generated by CUCollaborate’s ExpandCU software showing Family Trust FCU’s underserved area expansion across census tracts in both South and North Carolina.
These overall numbers represent an uptick from the previous three-month span, which saw six credit unions add seven underserved areas for a total of 1.3 million potential new members, with an average of 192,753 and median of 179,618 across all areas.
Once more, the data for the third quarter of 2022 serves to highlight there is opportunity for credit unions of all charter types to expand their field of membership. In terms of specific strategies, the numbers from both this and the past quarter clearly underscore the potential of community charter expansion, which led the way by every metric—total, average and median potential new members.
However, likewise apparent is the capacity of underserved areas to be a major driver of FOM growth, as evidenced by Family Trust FCU’s addition of 1.8 million potential new members, which made it the largest single expansion of the quarter.