Resources for the Application of a State Credit Union Charter
To operate a state credit union, the organizers of the credit union must receive approval of a charter from a state credit union regulatory agency. As of publication date, 45 states, the District of Columbia, and the territory of Puerto Rico have laws that allow for the chartering of credit unions at the state or territorial level. Three states (DE, SD, WY) do not have laws allowing for the state-level chartering of credit unions.
To assist individuals exploring the creation of a de novo (new) state credit union, NASCUS provides the following information and resources to help familiarize interested parties with the chartering process.
NOTE: Chartering a credit union is a formal legal process. While NASCUS works to maintain this information, state laws, regulations, and policies are subject to change. Potential charter applicants should contact the relevant state regulatory agency and seek counsel or guidance from individuals with specific experience in the process.
These resources are made possible by the generous support of contributors to the NASCUS’ Dual Charter Resource Initiative.
Resources include:
WHERE TO START?
The creation of a credit union charter involves significant effort well before an application can be submitted. In these initial stages, a group of organizers should be identified to share their efforts and expertise to define the proof of concept for the proposed credit union. Questions that need to be answered include defining the credit union’s purpose, its central office location, and, relatedly, choosing its state regulator.
Under that states laws and regulations, the organizers must also define a field of membership, develop a capital funding plan and potential subscribers, select a name for the credit union and research whether the proposed credit union will also seek a special designation available to credit unions such as Low-Income, Minority Depository Institution or Community Development Financial Institution Certification and potential availability of grants or special authorities under those certifications.
While working through this process, organizers must develop sufficient comfort with the heavily regulated credit union environment by researching and learning the applicable state law and regulation and the relevant insurance requirements of the primary deposit insurance provider, either the National Credit Union Administration (NCUA), American Share Insurance (ASI), or the CORPORACIÓN PÚBLICA PARA LA SUPERVISIÓN Y SEGURO DE COOPERATIVAS DE PUERTO RICO (COSSEC), depending upon what is available in your state.
One resource for organizers of a new credit union is the NASCUS “Benefits of the State Charter” guides, available for most states on the NASCUS “Around the States” web page. This resource provides an outline of the benefits of each state charter, as well as a reference guide to the unique legislative/statutory/regulatory environment within each state.
Throughout this process, the founders will likely need to obtain the services of expert vendors. Beyond the need for legal, accounting, and financial expertise, credit union operations are heavily regulated by various state and federal agencies and are subject to specific common/contract law, as well as fiduciary responsibilities to their members.
The Starting a New Credit Union Checklist, although not exhaustive, serves as a starting point for considering the various types of vendors a credit union may need to consider. While not an endorsement, this link provides a listing of vendors known to assist in the De Novo process.