The num­ber of newly char­tered credit unions can’t com­pen­sate for con­sol­i­da­tion across the in­dus­try, and many sources say that isn’t likely to change any­time soon.

Credit Union Journal - - Contents - BY PALASH GHOSH

Through Oc­to­ber, the num­ber of fed­er­ally in­sured credit unions shrank by more than 170 in­sti­tu­tions, with just two new CUS char­tered in 2017. CU Jour­nal checks in with those credit unions to get a sense of what lies ahead and the challenges de novo char­ters face.

FOR ALL THE GROWTH CREDIT UNIONS con­tin­ued to see through­out 2017, one area con­tin­ues to strug­gle: the num­ber of new in­sti­tu­tions.

Just two new credit unions were char­tered in 2017, and ob­servers say there are sev­eral good rea­sons for that. For one thing, the process isn’t easy – it usu­ally takes a sig­nif­i­cant amount of time, money, and a high tol­er­ance for frus­tra­tion and re­jec­tion.

Those CUS that were char­tered this year, how­ever, are aim­ing high for 2018.


Com­mu­nity HOPE Fed­eral Credit Union has ac­cu­mu­lated as­sets of about $400,000 since be­ing char­tered ear­lier this year, and the Lin­coln, Neb.-based CU is on track to ex­pand its prod­uct of­fer­ings in 2018.

“We are work­ing on some new prod­uct lines for next year, in­clud­ing a branded debit card and a credit card,” pres­i­dent and CEO Mark Koller told Credit Union Jour­nal. The credit union al­ready of­fers a plethora of fi­nan­cial prod­ucts, in­clud­ing auto loans, money or­ders, and cashier checks. The credit union is also plan­ning to of­fer fi­nan­cial lit­er­acy train­ing pro­grams.

Koller said he ex­pects the credit union to reach 300 mem­bers and have more than $1 mil­lion in as­sets by the end of 2018. Thus far, he noted, rep­re­sen­ta­tives have got­ten the word out to the com­mu­nity through di­rect calls and net­work­ing in or­der to reach new mem­bers.

Com­mu­nity HOPE cur­rently serves about 30 mem­bers. It was char­tered by the Na­tional Credit Union Ad­min­is­tra­tion in the sum­mer of 2017 to pro­vide af­ford­able fi­nan­cial ser­vices to low-in­come con­sumers.

Ac­cord­ing to its char­ter, Com­mu­nity HOPE FCU seeks to serve a pop­u­la­tion of about 40,000 peo­ple in a part of cen­tral Lin­coln called An­te­lope Val­ley. The credit union’s web­site says it aims to “re­duce the in­flu­ence of preda­tory pay­day loans and its dev­as­tat­ing im­pact on fam­i­lies’ health and fi­nan­cial well-be­ing” in Lin­coln.

Koller said the credit union has also re­ceived Low-in­come Des­ig­nated Fed­eral Credit Union char­ter from NCUA, which will al­low it to seek do­na­tions for op­er­a­tions and ac­cept non-mem­ber de­posits.

“HOPE” is an acro­nym for “Help­ing Our Peo­ple Ex­cel.”


In mid-septem­ber, NCUA ap­proved a fed­eral char­ter for Clean En­ergy Fed­eral Credit Union of Boul­der, Colo., which seeks to serve more than 4,000 mem­bers of the Amer­i­can So­lar En­ergy So­ci­ety, a non-profit that ad­vo­cates for sus­tain­able liv­ing and 100 per­cent re­new­able en­ergy

Specif­i­cally, Clean En­ergy FCU plans to pro­vide con­sumer fi­nanc­ing for clean en­ergy projects such as the pur­chase and in­stal­la­tion of so­lar pan­els and “high-ef­fi­ciency” home en­ergy im­prove­ments, as well as the pur­chase of elec­tric and hy­brid ve­hi­cles.

Terri Mick­elsen, CEO of Clean En­ergy FCU, told Credit Union Jour­nal, the credit union has not of­fi­cially launched yet, but ex­pects to do so in Jan­uary or Fe­bru­ary.

“In 2018, we plan to of­fer sav­ings ac­counts, clean en­ergy CDS, clean-en­ergy ve­hi­cle loans, res­i­den­tial so­lar elec­tric sys­tem loans, and green home im­prove­ment loans,” she said. “Our board has not yet fi­nal­ized our for­mal fi­nan­cial tar­gets for 2018.”

Clean En­ergy FCU took three years to ob­tain a char­ter, a process Chair­man Blake Jones called “in­ef­fi­cient and cum­ber­some.”

“The fed­eral char­ter ap­pli­ca­tion process was in­cred­i­bly in­ef­fi­cient and dif­fi­cult to nav­i­gate,” he said. “Also, it’s no easy feat to raise the vol­ume of do­na­tions that are re­quired for start­ing a de novo credit union.”


While most in the move­ment are happy to see new en­trants to the CU sys­tem, the low num­ber of new char­ters each year isn’t nearly enough to com­pen­sate for the over­all num­ber of losses due to merg­ers and liq­ui­da­tions — a fig­ure likely to top 200 for 2017 when all is said and done.

Den­nis Dol­lar, a for­mer NCUA chair­man and now a credit union con­sul­tant in Alabama, pointed out that the an­nual num­ber of new credit union char­ters has been in the sin­gle dig­its for the past twenty years – and new rules from NCUA may make de novo char­ters even more of a rar­ity.

“With the ex­panded field of mem­ber­ship rules, it is frankly easier for an em­ployer, a faith-based group, an as­so­ci­a­tion or even a neigh­bor­hood to get them­selves in­cluded in an ex­ist­ing credit union than it is to jump through the hur­dles to form a new credit union,” Dol­lar elab­o­rated. “Even with NCUA’S ex­press

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