WASHINGTON — Credit unions are eager for NCUA to tackle field of membership rules — so eager that even after a late night at the Wegner Awards dinner on Monday, executives flocked to the "open mic" session on FOM with NCUA Vice Chairman Rick Metsger at 7:15 a.m. Tuesday.
In opening the GAC session aimed at allowing credit unions to tell NCUA what some of the FOM barriers are that they would like to see broken down, Metsger noted, as he did during his general session speech on Monday, that the dual chartering system is in need of rejuvenation.
A number of states have charters that are significantly more progressive than the federal charter, he said, adding, "the dual chartering system works best when both sides are pushing each other to best match the needs of the member."
And since NCUA hasn't revised its FOM rule "since Justin Bieber was in diapers," as he put it during his general session remarks, Metsger said there are many aspects of the agency's rules that are outdated.
"Look at how we define 'community,' and then think about how young people today define 'community,'" he suggested. "A community of interest to today is their friends on Facebook and Twitter."
While Metsger may not have been suggesting using social media communities as a viable definition of "community" for FOM purposes, there's no question that FOM rules have not taken the emerging digital community into account.
"We used to have nine branches, now we are down to two," said Tom O'Shea, CEO of $173 million Aspire CU in Clark, N.J. Holding up his cell phone as he spoke at the microphone, he added, "Our branch is our phone. This is how our members want to do business with us today."
But one of the hottest topics was something far less sexy than mobile banking and social media: defining rural communities. Multiple CU executives bemoaned how the current definition of rural community has hamstrung their ability to grow.
"The paperwork burden to expand a rural district is really a struggle," said Roger Heacock, CEO of $1 billion Black Hills FCU in Rapid City, S.D. "It is like we are being penalized for being rural. In South Dakota it hard to have a well-defined community. I would have to string together a lot of counties over many hundreds of miles to get to a population of 250,000, but the mileage is hard to get around — but 410 miles in South Dakota is well-defined."
Among some of the other issues raised:
- Difficulty of finding good merger partners — especially for proactive small CUs who wish to merge before they get into trouble rather than waiting until they are forced to merge — when disparate FOMs require jumping through multiple hoops to get it done.
- TIP chartering problems — SchoolsFirst FCU in Santa Ana, Calif., converted from a select employee group charter to a TIP charter and in the process lost the ability to serve the students at the schools the $10 billion institution serves.
- Geographic barriers Marilyn Sperling President and CEO of Greylock FCU in Massachusetts detailed how her $1 billion CU is located in a county that is bordered by three different states. It already has 60% penetration in its FOM but cannot expand outward to the "doughnut of hill towns" that surround it because they are in different states. And all of those areas are low-income, underserved areas that Greylock, as a low-income CU, is perfectly poised to serve, if only it were allowed to do so.
- Streamlining process for adding "small" SEGs and redefining the size of "small" groups "A group of 3,000 [the current definition of "small group"] isn't enough to charter a new credit union," said Aspire FCU's O'Shea, saying that NCUA should only be taking a hard look at CUs looking to add groups that arguably are big enough to charter their own credit unions. He also suggested that CUs should be allowed to simply add a small group at its own discretion, noting it in the board minutes so an examiner can see that it has been added.
- One executive related being asked by the regulator to merge a troubled CU that was 200 miles away — but then wasn't allowed to add a county that was literally right next door to the institution.
- The need to strengthen the federal charter — "In the state of Nevada, 70% of the population is in [Washoe and Clark counties, where Reno and Las Vegas are located, respectively]. I've got an anxious state regulator who says, 'I'll give you nine counties if you come on over to state charter,'" said Dennis Flanigan, CEO of Great Basin FCU in Reno. "We're $135 million, and we're the biggest federal charter in Nevada. And there are just six of us left."