Why You Might Need an Overlap Letter to Expand

Overlap letters may be necessary when expanding your field of membership. This article discusses how different charter types are affected by overlaps.

CUCollaborate Staff


Nov 4



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CUCollaborate Staff

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CUCollaborate Staff

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When considering a field of membership expansion, you may run into an overlap with another credit union's field of membership. Depending upon your charter type, you may need to submit an overlap letter to the NCUA.

Overlaps are permitted when the expansion's beneficial impact on the convenience and needs of the proposed group outweighs any adverse effect on the overlapped credit union. 

The NCUA rules vary for different charter types and bonds. See how an overlap letter might affect your specific charter type:


Community Charter: If you are a community credit union you are in luck! The NCUA  permits community credit unions to overlap any other charters without performing an overlap analysis.


Associational Charter: Similar to a community charter, the NCUA permits associational credit unions to overlap any other charters without performing an overlap analysis. The difference for an associational charter is if there is internal reorganization, the NCUA will permit a complete overlap of the credit unions' fields of membership if a credit union expands internally through acquisition or otherwise.

If a sponsor organization sells off a group, new members can no longer be served unless they otherwise qualify for membership in the credit union or it converts to a multiple common bond. Credit unions must submit documentation explaining the restructuring and providing information regarding the new organizational structure.

Learn more about adding an association to your field of membership.


Multiple Common Bond: For this type of charter, there are a few different steps that must be taken when there is a possible overlap.

1) Credit unions must investigate the possibility of an overlap with federally insured credit unions prior to submitting an expansion request if the group has 5,000 or more primary potential members.

2) When an overlap situation requiring analysis does arise, officials of the expanding credit union must ascertain the views of the overlapped credit union. If the overlapped credit union does not object, the applicant must submit a letter or other documentation to that effect. If the overlapped credit union does not respond, the expanding credit union must notify the NCUA in writing of its attempt to obtain the overlapped credit union's comments.

3) The NCUA will approve an overlap if the expansion's beneficial effect in meeting the convenience and needs of the members of the group outweighs any adverse effect on the overlapped credit union.

Multiple common bond credit unions have different rules when it comes to organizational restructure. Overlaps may occur as a result of restructuring or merger of the parent organization. When such overlaps occur, each credit union must request a field of membership amendment to reflect the new groups each wishes to serve. The credit union can continue to serve any current group within its field of membership that is acquiring a new group or has been acquired by a new group. The new group cannot be served by the credit union until the field of membership amendment is approved by the NCUA.

Field of Membership Expansion

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