Choosing the right charter for FOM (Field of Membership) expansion is vital to a credit union’s strategy for growth. Institutions are offered the opportunity to operate under three specific types of charter: single common bond, community or multiple common bond. The choice will determine the future of the credit union, from regulatory requirements to growth to marketing investment.
Historically, credit unions focused on a sole group or physical location, which has allowed for strong, intimate member relationships, but that arrangement has not always facilitated growth. For credit unions in this position that wish to expand their FOM while maintaining a close connection to their members, the multiple common bond may be an avenue worth pursuing.
“Multiple common bond credit unions want to grow beyond a single market,” Sam Brownell, founder/CEO of CUCollaborate, said. “They want to preserve their identity with their SEGs (Select Employee Groups) with the benefits of a community charter.”
A multiple common bond credit union is chartered to serve a combination of distinct, definable single occupational and/or associational common bonds. According to the NCUA, this may include “an employer-based group or persons employed within a Trade, Industry or Profession” or “a member-based group meeting the NCUA’s threshold requirement and totality of circumstances test.”
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