Why We Switched To A State Charter

When Denver Community switched charters to expand its membership base, it gained regulatory advocates as well as potential members.
Carla Hedrick

Denver Community Credit Union was chartered in 1934 to serve the municipal employees of the city and county of Denver. The credit union converted to a community charter in 2000 to serve anyone who lived or worked in the city or county. In 2011, it converted from a federal to a state charter and expanded its field of membership to include two adjacent counties, Adams and Arapahoe. Today, the $257 million credit union serves nearly 25,000 members through its three stand-alone branch locations; it also participates in shared branching. Carla Hedrick began her career at Denver Community 33 years ago and became CEO in 1992. Here, she discusses why and how the credit union switched to a state charter as well as the unforeseen benefits conversion has offered.

We converted from a closed charter that was based on city and county employees to a community charter in 2000. Ten years later, we applied to NCUA to expand into two adjoining counties that interact with Denver quite readily. Denver County is geographically small, yet the area is highly competitive for financial service institutions; you have to be able to serve anyone in your market who is willing to come through your doors. We felt we needed this geographic expansion to have a thriving credit union. But because of the way NCUA enforces its field of membership rules, it turned down our application for the expansion even though our FOM would have been lower than the stipulated 2.5 million potential members. So, we began to evaluate our options.


  • Denver Community Credit Union
  • HQ: Denver, CO
  • Assets: $257M
  • Members: 25,028
  • 12-MO Share Growth: 6.50%
  • 12-MO Loan Growth: -2.92%
  • ROA: 1.55%

In Colorado, we have the Department of Regulatory Agencies, which includes the Division of Banking and the Division of Financial Services. The latter only oversees credit unions and savings and loan associations, but there are very few Colorado S&Ls, so it is primarily devoted to state credit unions. Because the Division of Financial Services is in Denver, it was not difficult to have face-to-face discussions about state regulations. Before we even decided to apply for a charter conversion, we were able to ask the Division people about how their regulations work, how they felt about field of membership expansion, and what opportunities we might have as a state charter. The fact that we could get to know them and know how they think and work was a nice benefit. We liked what we heard, so we decided to convert to a state charter.

The process was what you might expect for such an endeavor and was much like converting from a SEG to a community charter. We needed a good plan, including a marketing plan, and a presentation plan for the Division of Financial Services board, because it was in their hands whether or not to accept us as a state charter. We also submitted papers to NCUA to maintain our federal insurance. None of these tasks were particularly difficult.

Naturally, we had to inform our membership and hold a formal meeting for a vote on conversion. Deposit insurance was the only issue which was concerning to our members they wanted to know we were keeping insurance backed by the federal government. We assured them this would be the case and then they were comfortable with the idea.

We did not have any surprises, and the whole thing took about six months. It could have taken less time except we had to make notices and schedule membership meetings and the like. We did not hire a consultant or a law firm. We did the work with in-house staff who basically were working to make sure we had created and assembled all the information required of the state and federal regulators.

There have been some distinct advantages since we’ve converted. For example, we are physically close to our regulator about six blocks away so we can go in and talk any time. The state regulators and their staff are quite accessible, and they spend time with us on any issue we want to discuss. Colorado’s Division of Financial Services regulates 41 credit unions. Compare that to what NCUA has to oversee and you can understand why we feel we get personalized service and attention.

The Division board is pretty easy to work with. It consists of credit union CEOs, one community member-at-large, and a member of the S&L community. Division meetings are open, so we know what is going on, and communication is comfortable. We get a lot of support from the Division, its staff, and its board. In fact, the commissioner attended our annual meeting last year. He sees value in the credit unions he regulates and he is a good listener.

We also have sunset provisions here in Colorado, so regulations come up for review frequently. We find we have genuine input in suggesting changes and developing opportunities. What we say to the state regulators has real impact.

In addition, the Division of Financial Services acts as a kind of filter for us. It helps us understand where state regulations apply and where federal ones do, and essentially identifies where we can avoid bothering with certain regulations. That’s a big help.

On the other hand, we do have two examinations, one for state regulators and one for federal. But we carry these out at the same time and we have seen nothing but cooperation between the state and federal examiners.

All in all, we absolutely feel we did the right thing. It was the right move for us, but of course every credit union has to make its own assessment of how its charter is working for its membership. To this point, we have not seen any drawbacks. We take pride in the fact we are local, and we can now proclaim that we are more local than ever.

As told to Brooke C. Stoddard

April 7, 2014

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