Underserved Communities The New Focus In Community Charter Plans

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Much of the action in expanding field of membership shifted last year from community charter conversions or expansions to the addition of broad swaths of population through NCUA's underserved FOM program.

In fact, NCUA approved only 87 conversions to community charter last year, the fewest since 1996 when the agency's multiple groups FOM policy came under fire.

But many of the largest multiple-group credit unions have begun over the last two years using NCUA's so-called underserved expansions to add new communities-most of them near existing branches. They included Digital FCU, Marlborough, Mass.; Teachers FCU, Farmingville, N.Y.; American Heritage FCU, Philadelphia; Chartway FCU, Virginia Beach, Va.; Central Florida Educators FCU, Tampa, Fla.; L&N FCU, Louisville; SAFE FCU, Sumter, S.C.; Suncoast Schools FCU, Tampa; Truliant FCU, Winston-Salem, N.C.; Security Service FCU, San Antonio; Ent FCU, Colorado Springs; and Xerox FCU, El Segundo, Calif.

These credit unions added millions of low- and moderate-income Americans to the rolls of potential credit union members this way in 2004.

But another trend also emerged last year, and that was NCUA approving entire cities-some of the biggest in the U.S.-as low-income areas under its underserved policy. Many of the largest FOM grants for federal credit unions last year were approved under NCUA's underserved expansion program.

NCUA had set the stage for this new policy in 2003 by approving requests by federal credit unions to serve the entire the cities of Baltimore and Washington, D.C., both of which have large low income populations.

And last year NCUA added to it by approving underserved expansions covering the nation's fourth-largest city, Philadelphia (for Philadelphia FCU); the Twin Cities of St. Paul and Minneapolis (Teacher FCU); Tucson, Ariz., (Sunwest FCU); Richmond, Va.(Richmond FCU); and Washington, D.C., again (Treasury Department FCU).

In addition, Shell Employees Houston Texas FCU was granted approval to serve the entire city of Houston and its two-million residents through the low-income FOM policy, the largest underserved FOM approved yet.

Generally, a community or FOM qualifies as underserved under NCUA's rules if at least 20% of the population is below the poverty level or the median family income is below 80% of the national median.

According to NCUA, federal credit unions added more than 27-million potential members in 2004 through underserved FOM expansions, with 139 credit unions adding 240 underserved communities.

Texas, home of the biggest underserved expansion, lead the way by adding five million potential members in 27 designated underserved areas across the state, while New York added 37 designated underserved areas that will enable over 1.7-million potential members.

In the last four years, 697 federal credit unions have adopted 1,215 underserved areas, totaling 92-million potential members.

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