Equal in importance to the service and growth opportunities that come from adopting underserved areas, the ability to expand a credit union's outreach into an underserved neighborhood or community provides a membership diversification option that can help position the credit union to prosper for decades to come.

Growth is important, but diversification is essential.

The recent NCUA rule change certainly provides the continued option for SEG-based federal credit unions to reach out to the residents of underserved areas, and there are valuable reasons why this remains a solid business, member service and diversification strategy to consider. Underserved areas in a credit union's field of membership provide valuable financial growth.

Credit unions that have elected to adopt underserved areas have seen a significant increase in their member growth and financial strength. Over a three year period, recent NCUA statistics reveal that credit unions that adopted underserved areas have grown at an impressive membership growth rate of 17.43% over those three years, compared to the credit union cumulative membership growth which was 5.17% over that same three year period. The three year cumulative share growth for all federal credit unions was 41.28%, compared to 53.83% for credit unions adopting underserved areas. Regarding loans, the three-year loan growth for all federal credit unions was 31.57%, while those adopting underserved areas was considerably higher at 49.99%. Underserved areas in a credit union's field of membership provide valuable data regarding service to the underserved.

Credit unions are a valuable alternative to the pawn shops, payday lenders and check cashing outlets that have proliferated in many underserved neighborhoods across America. In today's political and regulatory environment, credit unions are being encouraged (and some are even being required) to provide their regulatory agencies with verifiable data regarding their service to members of modest means.

One of the benefits of adopting underserved areas is the ability to monitor the financial services offered to residents of these underserved areas. It is considerably easier to track residents of designated underserved geographic areas than it is to gather data from loan files and account documentation. Not only does a credit union extending its services to an underserved area have the opportunity to demonstrate its success as an alternative to the higher cost lenders in these neighborhoods, but at the same time they can gain the type of field of membership diversification that is essential for continued growth and future financial viability. Underserved areas in a credit union's field of membership provide valuable membership diversification.

While the charter types of credit unions that are able to adopt underserved areas have changed with the recent rule change, the qualifications for an area being classified as “underserved” have not. The six qualifying criteria to be considered “underserved” are spelled out in the NCUA Chartering and Field of Membership Manual. Some will be smaller areas, while some are more extensive. In some cases an entire city or county may meet the criteria. The extensive number of qualified underserved areas (estimated to have approximately 90 million residents nationwide) offers SEG-based federal credit unions with considerable options to consider as they seek to meet more member financial needs, even as they strive to secure the credit union's future through diversification of their field of membership. With over 90 million Americans living in underserved areas throughout the United States, many of them need a financial partner to assist them with their American Dream of financial self-sufficiency. A pawn shop or check cashing outlet is not the partner they need. Underserved areas across America need the lower cost financial services that can be provided by credit unions.

Recent rule changes have recognized the ability of SEG-based federal credit unions to adopt underserved areas. The doors are open if the vision and commitment is there to go through them.