Choosing the right charter for growth

South Carolina FCU shifts successfully from community to multiple common bond.

Some see field of membership as an antiquated notion, no longer reasonable in the modern financial services marketplace. Others embrace it as a defining characteristic of what makes credit unions different (and better) than banks. Choosing and then diving in deep to a niche market can create excellent member relationships if you choose it, while others prefer to cast a wider net.

When credit unions were permitted expanded FOM authorities in 1998 under HR 1151, the Credit Union Membership Access Act, the result was a mixed bag, opening up authorities for certain credit unions while closing doors to others. Thus, the community charter was born, and some credit unions assumed because members of the community already knew what a great deal they were and would come flocking in. This was not the case, and growth strategies have had to evolve.

In fact, $1.8 billion South Carolina Federal Credit Union, North Charleston, tried on the community charter in March 2003, which allowed it to serve a number of underserved areas. However, Chief Strategy Officer Troy Hall, Ph.D., CUDE, says the community field of membership did not serve the credit union as well as planned. Like an increasing number of credit unions, South Carolina FCU decided to convert back from a community charter to the less restrictive federal multiple common bond charter, which allows credit unions to serve an unlimited number of communities, employers and associations.

 

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