A federal credit union may be allowed to expand outside its defined area if the target area is “underserved” by other financial institutions.
During 2022 and 2023, 49 credit unions did just that. Some did so more than once.
These expansions have been beneficial to the communities that otherwise had little or no banking options in their vicinity as well as to the credit unions that sought to expand their reach.
Credit Unions Expanding into Underserved Areas
Generally speaking, community credit unions have to serve a well-defined community, neighborhood or rural district, but there are exceptions. One such exception is for “underserved” areas.
A federal credit union may be allowed to expand outside its defined area if the target area is an “investment area” (as defined in the Federal Credit Union Act) and is “underserved” by other financial institutions.
The 49 credit unions listed on page 5 each expanded into underserved areas during calendar year 2022 and/or 2023. Two of them did so both years. They were: 5-Star REV Federal Credit Union, Charleston, SC and 5-Star Communication Federal C.U., Oklahoma City, OK.
REV FCU was originally established in 1955 as CAB FCU. The acquisition itch hit in the 1980s and after taking over two neighboring credit unions, CAB changed its name to Heritage Trust FCU (1987).
All was quiet for almost another decade, when the acquisitions started again and in 2020 the name was also changed again. This time to REV FCU. REV FCU’s membership spans six counties from Charleston County, SC, where it began, up into Brunswick and Columbus counties in NC. Since the end of 2019, its membership has grown from roughly 50,000 to over 67,000.
Its latest expansion into an underserved area was approved on July 2, 2023 and increases REV’s potential membership by nearly 1,170,000. With its continued growth, both via acquisition and by expanding into underserved areas, REV FCU is now among the largest 7% of the nation’s credit unions with regulatory assets of $1.148 billion.
Communication FCU was originally established in 1939 as Pioneer Bell Credit Union. What began as a modest credit union intended to serve employees of Southwestern Bell Telephone in downtown Oklahoma City has grown exponentially since its inception—by acquisition as well as organically.
The name was changed in 1982 to reflect its expanded membership. Today, with regulatory assets of $2.113 billion and more than 123,000 members, Communication FCU dwarfs REV FCU. Its latest expansion into an underserved area was approved on February 17, 2023 and increases Communication FCU’s potential membership by over 63,000. Communication FCU is already among the largest 5% of U.S. credit unions by assets.
Two other credit unions had two expansions each into underserved areas approved in 2023. They were: 5-Star Pima Federal Credit Union, Tucson, AZ and 4-Star Southern Security FCU, Collierville, TN. In both cases, the two expansion areas are in their home state. (In case you didn’t notice: almost all of the credit unions listed on page 5 are recommended by Bauer.)
Pima Federal Credit Union’s membership originally focused primarily on education employees, and it still does. But, after two expansive additions to its service area, it now has a much larger footprint. Pima’s assets have increased from $933 million at the end of 2021 to over $1.2 billion today and membership is well over 66,000. Many of those new members, particularly in Apache and Navajo counties (which are primarily Indian reservation land), had little or no access to banking services prior to 2023.
Both of Southern Security FCU’s expansions were approved in April 2023, yet, between 3/31/2023 and 3/31/2024 Southern Security FCU’s membership actually declined by about 600 members (or 3%). Loans and other assets increased slightly over the 12 month period, but shares and deposits declined. This simply shows the time it can take between the approval and the actual expansion.
Pima and Southern Security, like the majority of credit union expansions into underserved areas, occurred within the same state in which the credit union is headquartered. That is not always the case, however. Two credit unions that received expansion approval into underserved areas in 2023, are expanding into other states. They are: 4-Star Global Credit Union, Anchorage, AK, and 5-Star United Southeast FCU, Bristol, TN
Global Credit Union, Anchorage, AK, gained approval in January 2023 to expand into underserved areas of Idaho. What began in 1941 with a handful of civilian employees of the Alaska Air Depot, has now become a sprawling financial institution with nearly $12 billion in assets. Its reach extends from Alaska all the way to Arizona (including CA, ID and WA) and even to military bases in Italy.
United Southeastern FCU, Bristol, TN did not travel nearly so far. In fact, four of its six offices are already located in VA where its newly approved underserved area is located.
