NDFOMModernization

Preserving Financial Choice for all North Dakotans
Vote YES on SB 2266

7 Reasons Credit Unions Need North Dakota Field of Membership (FOM) Modernization

North Dakota is open for business – except for credit unions!
North Dakota state chartered credit unions operate under one of the strictest Field of Membership (FOM) statutes in the nation, particularly in comparison to federally chartered credit unions. As written, only those residing within 75 miles of a credit union’s home office, or similar limited radius of a branch, can be a member of an “open charter” North Dakota state chartered credit union [1]. Imagine that! Only 75 miles in one of the largest, most rural states in the country.

North Dakota’s state chartered credit unions are left behind.
North Dakota credit unions seek to have similarity with federally chartered credit unions by allowing an individual to join if they work, or attend school in the community, in addition to the existing residing requirements. We are also looking to expand the radius to allow credit unions to serve more rural communities and banking deserts. To remain viable, stabilize their asset base and diversify their loan portfolio, small credit unions need to be able to expand their FOM. Rural credit unions operating in dwindling population centers need to be able expand for safety and soundness.

Help protect financial choice for North Dakotans.
North Dakota’s credit unions are dedicated to ensuring that people have a stable financial footing to weather life’s emergencies. As more communities face the prospect of becoming a banking desert, credit unions are stepping in to help, even in some of the most impoverished communities in our state. Credit unions work hard to find solutions that meet their members where they are. After all, credit unions serve them, not Wall Street investors.

Allow North Dakota credit unions to remain relevant and compete.
To create a more equitable and inclusive financial system, the legislature must expand access to trusted, regulated, and proven financial partners. Credit unions stand ready to fill that role. It is time to modernize the North Dakota FOM statute to enhance credit unions’ ability to compete in an ever-changing financial service environment.

The Original Consumer Financial Protectors and Financial First Responders.
As not-for-profit cooperatives, credit unions aren’t driven to enrich investors. They treat their members as if they own the credit union—because they do. This difference comes with more than a century-long proven track record of doing right by our members. Credit unions need the option of being able to establish a branch in a community that another financial institution has vacated or may not be serving competitively, otherwise compromising consumers’ ability to choose.

North Dakota credit union numbers are decreasing when consumers need us most.
In 2005, there were 55 credit unions in North Dakota, 35 of which were state chartered credit unions. Today, just 31 surviving credit unions call North Dakota home; of those only 18 are state chartered credit unions. In part, because of the detrimental current FOM statute, 24 credit unions, 16 of which were state chartered credit unions, have been acquired by other credit unions in less than 20 years. What will the next 20 years bring?

North Dakota credit unions are not a threat to banks or community banks.

Banks have a near monopoly in North Dakota with a 90% share of financial institution deposits.
Credit unions have held just 10% market share in deposits since 1994 – nearly three decades!
Out-of-state banks control 25% of North Dakota bank deposits.
In the past five years alone, community banks in North Dakota have grown deposits more than credit unions have grown since their inception in the state in the early 20th century.
North Dakota credit union membership has only grown by 17,000 members, or less than 8% since the last statutory FOM change in 2005 was passed. Nationally, credit union membership has grown by 54% over that same period.
Assets to Assets as of September 30, 2022: state chartered banks reported $41 billion in assets, 10X more than the $4.7 billion in assets held by our state chartered credit unions, according to the North Dakota Department of Financial Institutions (DFI).

[1] "Open charter" means a credit union charter issued to serve groups within a geographical boundary. North Dakota Administrative Code 13-03-14-01. Compared to “Closed charter” credit union which means a credit union charter issued to serve groups having a common bond of occupation or association. North Dakota Administrative Code 13-03-14-01.