Your Charter Is Your DNA

Credit unions with closed charters, community charters, or a little of both have fundamentally different DNA. These three articles illustrate how they succeed in different ways.

Of the federally-chartered credit unions, 2870, or about 44%, were closed-charter institutions as of September 20, 2015.

1151, or 18 percent have only community charters. The other 62% are a blend of both.

These three groups have fundamentally different DNA and their members often have different needs, so their paths to success are also often fundamentally different.

The articles pulled together here are not just about how to serve each of these membership types. The real theme here is that whether you are closed, community, or a blend of both, success requires remembering kind of institution you are and staying focused on that.


Honda FCU ($671.8M, Torrance, CA) is a standout example when it comes to success with a closed-SEG charter. Read this excerpt from Nurturing A Successful SEG Business Partnership to get an idea of how they converted themselves from a luxury to a necessity for their SEG parent and grew profits in the process:

A number of years ago, Honda faced a challenge familiar to many credit unions: It realized net interest income alone was not going to sustain the credit union moving forward…

The credit union had a positive relationship with its single sponsor, The Honda Companies, but that relationship was limited to serving the financial product and service needs of employees. So the credit union decided to expand its SEG relationship and become a trusted financial advisor at the corporate level in addition to serving individual employee needs. With its future hinging on the success of the expanded relationship, the credit union new it needed to make helping Honda grow and prosper a primary strategic goal.

The credit union ended up including Honda Companies executives in its planning efforts, launching products that saved its sponsor money, and becoming an in-house financial advisor. By focusing on what it could do for its sponsor, it found its true footing.


Greater Abbeville FCU ($13.8M, Abbeville, SC) switched to a community charter in 2004, but when a previously existing SEG sponsor began mass layoffs, the credit union sprang into action. Abbeville was especially effective because it already had experience with that kind of situation. Here’s an excerpt from A Pattern Of Service:

When the layoffs were announced, we felt like we had a commitment to that group of employees, says CEO Faye Crocker.

From its experience with the union strike, the credit union learned a personalize approach is better than a blanket one. Taking a hard-line and forcing payment without considering the members and their situation only leads to unpaid loans and charge-offs, which ultimately damages both the members and the institution.

Credit unions were formed for this reason, Crocker says. We learned that during the union strike in 1993 and applied it to the Mohawk situation. It serves both the member well and the credit union well.

Abbeville FCU is a good example of how to expand out to the community, and stay in touch with its roots.


Serving a community can be especially difficult because credit unions have to go digging to really understand what that field of membership looks like.

To Serve Romans, BE A Roman discusses ways to weave an institution into the fabric of local groups ranging from military to religious to business

Serving multiple SEGs and covering large geographic areas makes community relations much more difficult. The first step in having an effective community relations program is to have a clear focus on a group of potential members, with the goal of eventually serving more than 50% of that group. Use the following examples as a guide to promote relationships within the community.

On the military:

Eat, play, and work with the credit union’s military members. Volunteer for programs the commanding officers and executive officers favor. Identify the programs most popular with military dependents and become a major participant. Recruit and hire military spouses…

On finding new business accounts:

Consider membership in the local private club. This is not elitism. It acknowledges the credit union wants to attract business leaders and wants to give those leaders the opportunity to get to know the institution.

Credit Unions do sometimes change charters, and there are good reasons for that. But that’s never a solution in itself. The real solution will always involve staying focused on the real identity of your institution.

February 15, 2016

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