NCUA Report - November 2011

Chairman’s Corner
LIFTING THE BURDEN ON COMMUNITY CHARTERS

Two years ago at an open NCUA Board meeting, I held up a six-inch-thick binder filled with hundreds of pages from one single application for a community charter. I then dropped the 10-pound binder on the table to emphasize the heavy regulatory burden we were lifting.

Charter Conversions and Expansions. Attached to the letter was a template outlining exactly what NCUA is looking for in both the business plan and the marketing plan.

The template is only five pages.

It did not seem right that federal credit unions were spending time and money working with consultants to prepare enormous binders to justify a community charter. I felt strongly that those credit unions should instead be allowed to devote their time and money toward reaching new members.

Yet this month, when the first community charter applications came to my office under this streamlined standard, I was shocked to see the new applications were still hundreds of pages long! The binders were as thick as ever—filled with reams of unnecessary paperwork that likely cost those credit unions far too many billable hours.

Debbie Matz

Chairman

So, when the NCUA Board streamlined our field of membership regulation, we made it clear that federal credit unions no longer would have to submit massive applications for community charters. All NCUA requires now is a business plan and a marketing plan to demonstrate how the federal credit union will serve the community.

If the plans are sufficient, and the community’s population is up to 1 million, NCUA's Office of Consumer Protection can approve the charter. The only applications the NCUA Board must approve are those designed to serve communities larger than 1 million residents.

Understandably, some credit union officials have asked how NCUA would determine whether their plans were sufficient to serve their community. So in March, I sent a Letter to Federal Credit Unions on Community

How ironic. Here is a case where NCUA relieved a regulatory burden, but some federal credit unions are making it more difficult than it needs to be.

So if your federal credit union is considering converting to a community charter or expanding your current community charter, I have one simple message: just follow our template. It is on our website at www.ncua.gov under 2011 Letters to Federal Credit Unions. And it is very straightforward.

The business plan template provides specific guidance on how to document: The marketing plan template provides specific guidance on how to document:

; Reasons for the community charter

; Groups outside the proposed community

; Products and services ; Growth projections ; Financial impact

; Branch structure

; Community demographics ; Marketing to all groups

; Community-based organizations

; Marketing budget
; Timetable
All but one of these sections could be prepared in-house, based on
information credit unions already have. The one exception might be
community demographics. To help complete that section, the template
suggests outside resources you could cite, starting with the Census Bureau.

A broader membership base empowers credit unions to reach new markets. And a diverse membership strengthens safety and soundness. This is why NCUA lifted the burden on federal credit unions seeking to expand and diversify.