HARRISBURG, Pa. - The Pennsylvania Credit Union League is seeing a shift in the approaches affiliated credit unions are taking to build membership. About a year ago, calls to the league's Compliance and Information Services focused on questions concerning the details of adding SEGs. In fact, last summer the PCUL...
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HARRISBURG, Pa. – The Pennsylvania Credit Union League is seeing a shift in the approaches affiliated credit unions are taking to build membership. About a year ago, calls to the league’s Compliance and Information Services focused on questions concerning the details of adding SEGs. In fact, last summer the PCUL published in its Keynotes newsletter pointers credit unions should consider as they weighed which SEGs would make a good fit. Today those calls are more likely to involve pursuing a community charter. John Kilduff, manager of compliance and information services, has seen the shift. “When that article appeared in 2000, we were getting a lot of calls about adding new companies (to the field of membership). Today, when credit unions call our 800-line, we’re getting a lot more requests for information on serving the underserved and community charters – more than we are on SEGs right now,” he said. “It just seems as though in the last year or year and a half some credit unions have hit the wall in looking for new companies. There are only so many companies available out there. Credit unions are looking to increase membership in a different way,” Kilduff said. The trend seems to be occurring across the state in both major metropolitan areas and in rural locations. A typical SEG group involves 75 to 100 people. So a credit union may grow by less than 100 members each time it adds a SEG. By comparison, a community charter may open membership to thousands of people. Rick Wargo, vp/general counsel, agrees a shift is taking place. “Credit unions call me to pick my brain,” he noted. “I don’t get as many questions as I did in ’98 or ’99 about multiple groups. There’s more interest in either serving an underserved community, or a flat-out community charter conversion. “In fact, within the past week we’ve been working with one credit union on an underserved community application. Earlier this year I spent a lot of time with two credit unions, one on underserved and another debating community charter conversion. Within a few weeks I’ll be doing my second presentation to a credit union board about chartering options – state versus federal, community versus multiple groups,” Wargo added One of the first questions Wargo typically hears from a credit union considering a community charter concerns how NCUA defines a community. Wargo goes directly to a laundry list of factors laid out in the NCUA charter manual. Some of those factors include shared school districts, shared police and fire districts, major trade areas and highway patterns. In some states federally-chartered credit unions gripe that state-chartered credit unions enjoy an easier time when they seek a community charter. That isn’t a front-burner issue in Pennsylvania, Wargo and Kilduff indicate. Although the Pennsylvania credit union code does allow for community charters, authorities only granted the first community charter within the past couple months. Wargo says it’s very difficult in Pennsylvania for state agencies to pass formal regulations. They rely on the language of the state code, but there is no standardized definition of a community charter. State authorities do look at NCUA’s membership manual. Kilduff said it’s still too soon to gauge how successful credit unions are when they shift to a community charter. “Remember, when somebody does go to a community charter, they must have a marketing plan and business plan that goes out five years to show the regulator how they plan to reach out to their community,” he said. “I’d say within the next year or two we be able to find out more.” -
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