The Credit Union Journal
The National Credit Union Administration, which has steadily expanded parameters for fields of membership to include multiple counties encompassing millions of people, has
Though Delaware has just three counties and only about 800,000 residents, the NCUA said last week that it denied Del-One Federal Credit Union's request because federal credit unions are prohibited from having statewide charters.
At least one state, Washington, lets state-chartered credit unions serve the entire state.
When Congress passed the Credit Union Membership Access Act in 1998, it rewrote field-of-membership rules to add the word "local" to community chartering standards for federal credit unions, according to Hattie Ulan, special counsel to NCUA's general counsel.
She told the NCUA board of this wrinkle in the law during last week's monthly meeting. And the agency does not believe an entire state, no matter how small, "meets the statutory requirement of being a local community," Ms. Ulan said in an interview.
Delaware, according to Ms. Ulan, is really two communities divided by the Delaware Canal. The upper quarter of the state is largely urban, but the rest of the state is mostly rural.
Formerly Delaware Federal Credit Union, the $100 million-asset Del-One has a penetration rate of just 20% within its field of membership. Ms. Ulan said it has other options for expanding its market, including adding select groups to the 100 select employee groups it now serves, or adding underserved communities, which, as a multiple-group credit union, it is authorized to do. The credit union has 30,000 members.
The three-person NCUA board voted unanimously to reject the credit union's request.
"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.
This was the second time NCUA has rejected the credit union's bid for a statewide charter. A similar request was denied in 2000.
