Chartering a new credit union requires patience, perseveranceand planning, requirements that few know better than KeithStone.

Accordingly, Stone is optimistic about the future of The FinestFederal Credit Union, a brand new financial cooperative charteredin February to serve the almost 75,000 employees of federal, state,county and municipal agencies or departments engaged in policeprotection in the city of New York. The Finest FCU opened its doorson May 13 in a ribbon-cutting ceremony that included NCUA ChairmanDebbie Matz.

But Stone, a financial industry veteran and president/CEO of thenew credit union, was the first to say the road to launching thefirst new credit union of 2015 was anything but smooth. Theinitiative, he explained, was almost a decade in the making.

“The idea for a credit union started years ago when a New YorkCity police officer wondered why the world's largest police forcedid not have its own credit union,” Stone said. “The actualplanning of the credit union started in 2007, but the recessionkilled off the funding and we couldn't move ahead.”

Connie Scherrer, president/CEO of the new Seneca Nation ofIndians Federal Credit Union, based in Irving, N.Y. and the year'ssecond new charter, told a similar story. The 34-year banking andcredit union industry veteran found herself facing a long,sometimes arduous development process.

Seneca Nation of Indians FCU was chartered May 15 to serve the8,100 members of the Seneca nation and the 5,000 employees of itsvarious business enterprises, including three casinos the Senecaown in upstate New York. The credit union, scheduled to open inAugust, also was years in the making, Scherrer said.

“Putting a realistic business plan and budget together and stillstaying conservative about it was a real challenge,” Scherrer said.“We put the paperwork through three years ago, but we feel theSeneca will truly embrace this and that we will be successful.”

Both new federally-chartered credit unions were subject to therigors and requirements of the NCUA.

The agency maintains that the process for chartering a creditunion has not become more complicated in recent years, according toRobert Leonard, director of consumer access in the NCUA's Office ofConsumer Protection.

“The requirements have remained steady over time,” Leonard said.“New charters require a field of membership that qualifies withfederal chartering policy, the organizers must be of soundcharacter and represent the members, and organizers must presentsatisfactory business and marketing plans showing that the creditunion will be viable and sustainable over time.”

However, there are multiple steps within each one of thoseseemingly straightforward requirements that can significantlycomplicate the chartering process, say those who have undergone theexercise. Moreover, Leonard's summary says nothing about thegrowing mountain of regulations new credit unions face to whichtheir predecessors from a decade earlier were not subject,according to Ron McLean, senior vice president and spokesman forthe Credit Union Association of New York.

“Chartering a credit union certainly has become more difficultin the past decade as the complexity involved in operating a creditunion has increased significantly,” McLean said. “Regulations aloneand the increased regulatory burden make operating a credit unionmore challenging for the staff, leadership and board.”

Read more: CUANY assisted both newly-charteredcredit unions this year …

CUANY provided organizational assistance to both newly charteredcredit unions, McLean explained. The state trade association beganworking with The Finest FCU months ago, primarily providingcompliance and consulting assistance.

In the case of Seneca Nation of Indians FCU, McLean said, theinvolvement started years earlier with meetings with credit unionleadership. CUANY reviewed credit union financial projections,offered numerous sample policies and made referrals for potentialbusiness partners. The trade group also provided HR services,including salary descriptions, salary data and a job posting on theCUANY website.

Organizing the Finest FCU was a lengthy process, according toStone, who held executive positions at Smith Barney, Bear Stearnsand Merrill Lynch while also serving on the board and, ultimately,as vice president of the $47 million Consumers Credit Union inBrooklyn. N.Y.

Stone was originally tapped as The Finest FCU's president/CEO in2007, but then loss of funding put the credit union formation onhold for seven years. A $2 million grant from insurance providerAmTrust Financial Services Inc. helped the credit union get theneeded initial funding to open its doors, he said.

“Other than funding, the most important thing in starting acredit union is having a viable business plan, a strong vision ofwho you want your membership to be, what products you're going tooffer and how you're going to go about doing it all,” Stonesaid.

The Finest FCU, which operates with four staff out of a singleoffice in lower Manhattan, expects to end 2015 with about $7million in assets, an amount it hopes will increase to $10 millionand $12 million by year-end 2016, he said.

Greater Metro Federal Credit Union, a $90 million institution inLong Island City, N.Y., is working with the Finest FCU as a mentorinstitution and will also provide access for members of the newcredit union through its various branches, Stone said.

Seneca Nation of Indians FCU started in a similar fashion,securing a $1 million grant from the Seneca Nation, with thepromise of continued funding through the first five years as thecredit union grows, Scherrer said. The credit union has ambitiousplans for its August opening, including six staff operating threesmall branches in Irving, Niagara Falls and Salamanca, N.Y.

Both The Finest FCU and Seneca Nation of Indians FCU occupydistinct niches, which made it easier for them to attract supportand gain members, the NCUA's Leonard said. A decline in the numberof new charters over the years can be credited in part to afinancial services market that is oversaturated, as well as theincreasing challenges and rising costs posed by credit unionoperations.

New credit unions are given a 10-year pardon from some of theNCUA's more rigorous requirements in recognition of the fact thatthey are smaller institutions still in their startup phase.However, that does not entirely exempt them from increasedregulatory burdens.

“The scope of regulations will still affect new credit unions,but smaller institutions would have more flexibility under agencyrules,” NCUA Deputy Director of Consumer Protection Matt Biliourisexplained. “As you get more sophisticated, more regulations apply,but the CFPB and the Federal Reserve have carve-outs that deal withnew institutions and flexibilities afforded to small institutionsto deal with those requirements.”