ALEXANDRIA, Va. -
Though the request by Del-One Federal Credit Union (formerly Delaware Federal Credit Union) would only include three counties and 800,000 people in the Diamond State, NCUA ruled a statewide charter violates provisions of the FCU Act and its FOM and Chartering Manual, which bars statewide charters.
At least one state, Washington, has crossed the community chartering threshold and now allows its credit unions to serve the entire state.
But as part of HR 1151, the 1998 CU Membership Access Act, Congress rewrote FOM standards to add the key word "local" to community chartering standards for federal credit unions, Hattie Ulan, special counsel to NCUA's general counsel, told the NCUA Board during last week's monthly meeting. And the agency does not believe an entire state comes under the definition of "local community."
"No state meets the statutory requirement of being a local community," said Ulan.
The state of Delaware, according to Ulan, is really two separate communities divided by the Delaware Canal. The upper quarter of the state is largely urban, while the rest of the state is mostly rural.
Del-One, the $100-million credit union with a penetration rate of just 20% of its field of membership, has other options to expand its market, suggested Ulan.
That includes adding select groups to the 100 SEGs it now serves, or adding underserved communities, which, as a multiple-group credit union, it is authorized to do. The credit union serves 30,000 members out of a potential 145,000.
"The chartering manual is very clear that state boundaries do not meet the requirements of a community charter," said NCUA Chairman JoAnn Johnson.
"This is one area where the regulatory standards are very clear," agreed Vice Chairman Rodney Hood.
The three-person NCUA Board voted unanimously to reject the credit union's request, which was also rejected by the regional director.
This is the second time NCUA rejected the credit union's bid for a statewide charter. A similar request was denied in 2000.
