Open Membership Associations May Lead to Long-Term Growth

Adding an open membership association could provide growth benefits to a credit union over the long term.

CUCollaborate Staff


Jan 27



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CUCollaborate Staff

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CUCollaborate Staff

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For many credit unions, the options to expand their field of membership (FOM) are limited and heavily regulated. Multiple-common bond credit unions, as a result, are increasingly turning to adding an open membership association to their charter. Historically, credit unions with an open membership association have received a great deal of scrutiny from the NCUA and bankers, being the subject of controversy from banks and credit unions, alike. However, armed with a clarifying memo issued by the NCUA in September 2013, credit unions obtained clear directions and guidelines to move forward with all the potential long-term benefits that come with adding an open membership association.

To determine the breadth and scope of possible benefits  the addition of an open membership association can lead to, CUCollaborate followed the journey of three federal multiple common bond credit unions. All three credit unions added the American Consumer Council (ACC) to their respective charters, effective August 27th, 2010. The expected benefits of adding the ACC were to be able to grow the credit unions' respective memberships in terms of individual members and savings accounts, while significantly increasing the credit unions’ total assets.

When adding an association with the goal of growing membership, open membership associations can provide credit unions with the most value. With minimal qualifications to join an association, organizations such as the ACC remove or lessen the burden of credit union membership eligibility.

Established in 1987 the ACC’s mission is to promote consumer education, economic security and financial literacy. With more than 142,000 members nationwide, the ACC qualifies an individual who has used a major consumer product, to include financial services, for membership at a minimal cost of just $8.00 annually, or a lifetime membership for $15.00, in accordance with the NCUA’s Totality of the Circumstance Test. Further, to meet the Totality of the Circumstance Test, the ACC maintains a membership list, sponsors activities, permits members to participate in furthering the organization’s mission and gives members the right to vote. With minimal membership requirements and financial contributions, the ACC makes membership eligibility feasible and easily accessible.

The credit unions selected for this comparison were identified by their peer group and date that ACC membership became effective. All three retain a low-income designation and are each of a different peer group. Our assessment of the impact of adding the ACC recounts data pulled from the Q4 Financial Performance Report (FPR) for each credit union upon the year of ACC acceptance 2010, followed by yearend FPRs for the subsequent milestones of years three, five and seven after the addition of the ACC to their fields of membership.

BCD Federal Credit Union

In 2010 BCD's membership was 224,503 out of a potential 5,809,050 prospective members. While the number of prospective members showed minimal change after the addition of the ACC to their charter, the number of new members has increased, allowing for BCD to close the gap on their FOM penetration rate from 4% in 2010 to 5% in 2017. Although showing signs of fluctuation over the years, the total number of savings accounts by year seven illustrated upward growth, from 422,988 savings accounts in 2010 to 436,576 in 2017. Perhaps most impressively is that within seven years of adding the ACC, the credit union increased its total assets from $3.5 billion in 2010 to $4.3 billion by 2017.

LMN Federal Credit Union

LMN did not show an improvement in membership within the first seven years of adding the ACC. Instead, the credit union membership saw a slight decrease of approximately .5% from 17,274 members, along with a decrease in the total population of potential members in that time frame. Because of the decrease in potential members, LMN's member penetration rate increased from 17% in 2010 to 23% in 2017. Despite the minor dip in membership, the credit union saw measurable growth in both total number of savings accounts and total asset size. The credit union grew the total number of savings accounts by 722 over the seven-year period, in addition to increasing assets from $104 million to $119 million.

XYZ Federal Credit Union

The smallest and most recently chartered of the credit unions researched was XZY. In peer group 3, XYZ had a membership of 2,862 members and total assets of $42.5 million. At the post-ACC addition three- and five-year milestones, the credit union reported a decrease in both membership numbers and total assets. However, the seven-year milestone indicated a reverse of this trend, showing favorable growth, with a 50% increase in the total number of members. Additionally, the credit union increased the total number of savings accounts from 4,800 in 2010 to 6,245 in 2017 and grew its asset size to $46.6 million.


Our preliminary research indicates that the three credit unions did not experience notable growth following the early years of adding the ACC to their charter.  However, within seven years, all three credit unions began to show increases in several of the following: number of members, potential members, percentage of members to potential members, number of savings accounts and total assets. 

What is striking about the growth trends of the credit unions are the numbers reported in the most recent FPRs from September 2019. BCD increased the size of its membership by approximately 10% and increased total assets by 29%. LMN saw a reversal in membership, to increase by 5%, while continuing to grow total assets more than 19%. And perhaps the most significant performance change came from XYZ, with an 81% increase in membership and 40% growth in total assets.

While this article suggests that the addition of open membership associations with proper financial and operational support may enhance credit union membership growth and financial performance, CUCollaborate will continue to monitor the growth of these credit unions and investigate other factors, such as mergers and undeserved areas that may have impacted these preliminary findings. 

Field of Membership Expansion

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