The Challenges & Opportunities For Community Charters

In some instances community-chartered credit unions perform differently than credit unions with more traditional fields of membership.


The Credit Union Membership Access Act, which President Bill Clinton signed in 1998, gave credit unions a clearer understanding and process for serving a geographic community, though some state-chartered credit unions had been serving geographic communities for many years prior to this legislation. Every American has the option to join multiple credit unions, and today’s credit unions serve a potential membership base of 1.4 billion people. That’s more than four-and-a-half times the U. S. population.

In some instances, community-chartered credit unions perform differently than credit unions with more traditional fields of membership such as the military or employers. This comparative analysis looks at mid-year 2010 data for several groups. The NCUA does not release field of membership data on state-chartered credit unions, so the groups in this comparison are defined as:

  • U.S. Credit Union Industry: Average of all federal and state charters, including privately insured institutions
  • Community Charters (Federal): All federally chartered credit unions with a Community or Other designated field of membership
  • All Other FOMs (Federal): All federally chartered credit unions with fields of membership other than Community or Other. Includes all SEG groups (single or multiple), Military, Religious, etc.

Field Of Membership Comparison Scorecard

Key differences between the Community Charter and Other Charter groups show both challenges and opportunities for today’s credit unions – regardless of their field of membership.

  • Community credit unions posted annual positive loan growth of 0.35%, while other FOM credit unions had higher annual share growth of 6.76%.
  • Other FOM credit unions had net new membership growth of 2.4% year-over-year. Community credit unions posted a lower growth rate of 1.35%. Community credit unions have a broader base of membership; they also have a lower penetration in their field of membership.
  • Community credit unions have lower share and loan balances per member than the Other FOM group but higher penetration metrics. Serving a broader community usually indicates the credit union will have access to a wider demographic base, which includes income. However, for credit card penetration, these credit unions lag significantly behind their other FOM peers who might have an advantage because of affinity card programs.
  • Other FOM credit unions are more efficient in nearly every measure. They originate more loans, have lower expenses, and generate more net income per member than their community charter peers.

Callahan & Associates' Field Of Membership Comparison Scorecard
Source: Callahan & Associates' Peer-to-Peer software

Further changes to the community charter might be ahead. The NCUA has proposed a new set of rules and regulations for objectively defining a local community. A defined community – whether geographic or association- or employer-based – needs focus in order to succeed and be a true community.

This field of membership analysis was powered by the Peer-to-Peer software. For the full scorecard, pick up this quarter’s Credit Union Strategy & Performance and turn to page 49.