The 1998 Credit Union Membership Access Act (CUMAA) and ensuing FOM rule interpretations
in 1999, 2000 and 2003, provided dramatic growth opportunities for multiple group charter federal credit unions to expand their fields of membership
According to Dennis Dollar, former NCUA Chairman, additional expansion opportunities
will strengthen credit unions by allowing them to diversify their membership
bases. It will also enable them to serve communities more effectively by providing
for the creation of financial relationships with underserved segments of the
A multiple group charter federal credit union serves a combination of distinct,
definable single occupational and/or associational common bond groups. Each
of the groups may be unrelated to one another. This type of FCU may expand its
field of membership in the following ways by:
- Adding new select occupational or associational groups;
- Assisting individuals who share a common bond or common interests to form
an association, which among other benefits, will enable its members to be
eligible for credit union service;
- Adding underserved areas;
- Merging with other credit unions;
- Converting to serving a particular trade, industry or profession (TIP);
- Converting to a community charter.
Several credit unions took advantage of the 2003 CUMAA interpretation which
provides for the conversion of some federal credit unions to a TIP charter.
Among them, American Airlines Federal Credit Union recently expanded its charter
to include all employees in the air transportation industry. While American
Airlines remains the credit union's primary sponsor, AAFCU's Board of Directors
realized that, in the wake of the events of September 11, 2001, the airline's
staff was not likely to continue to grow as it had during the previous 10 years.
In order to sustain continued growth, particularly in loans, the credit union
applied for and was granted a TIP charter in 2003.
While it can benefit certain credit unions, the TIP charter is a distinct charter
and cannot be added to an existing multiple group charter at this time. The
decision to convert to a TIP charter has to be made carefully. Some growth opportunities
for a credit union could be limited since existing groups that fall outside
the TIP definition can no longer be served. Current members can be retained
however, even if they do not meet the TIP definition.
American Airlines Credit Union's conversion to a TIP charter demonstrates the
potential for CUMAA to empower federal credit unions to sustain membership and
revenue growth through diversification of their membership. As with any charter
change, the opportunities must be balanced with the ability to meet new challenges.
To gain a better understanding of federal credit unions' charter expansion
and conversion opportunities and options under CUMAA, click here.