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TIPping the Balance Towards Growth
The NCUA’s TIP (Trade, Industry or Profession) charter offers credit unions the opportunity to serve a highly specific, narrowly defined group. Rules surrounding the charter are strict, stating this group must share a common bond by virtue of producing similar products, providing similar services or participating in the same type of business, thus TIP Charter is available only to single common bond credit unions.
In general, excluding credit unions operating in multiple states or nationally, a geographic limitation is required for the charter. This usually corresponds to an institution’s current or planned operational area.
Yet despite such restrictions, TIP Charters also presents an intriguing pathway to field of membership expansion.
The TIP Charter was introduced in 2003, and since then has been implemented by many institutions of varying sizes and scopes. CUCollaborate spoke with representatives of three such credit unions to better understand their experience.
Download our field of membership handbook to learn more about the other charter types available.
Healthcare Financial FCU, based in New Haven, Conn., had served the employees of Yale New Haven Hospital since 1950. In 2012 the credit union was approved for a TIP Charter.
“The primary reason was to expand our footprint,” CEO Josephine Savino explained. “We previously had a SEG (Select Employee Group) charter only serving employees and their families employed by one employer. Even though we had a relationship with our sponsor, and still maintain this relationship, marketing restrictions were placed globally, which made it difficult for us to grow our membership within the SEG.”
Through the charter, Healthcare Financial is now able to serve healthcare workers and facilities across the entire state. “We knew that becoming a TIP Charter for healthcare workers for the State of Connecticut would give us the opportunity to offer our products and services, many at no cost, to a wider professional group, one that we understood,” Savino said. “We have been able to grow our membership 36%. This figure does include a merger with another healthcare credit union, which our TIP charter made possible. Even without the merger, our membership grew over 22%.”
The move has proved to be a success and further allowed the credit union to offer internet and digital services to attract members outside the branch locations. “I believe our products and services rival many of the larger financial institutions,” Savino said, “including banks and larger credit unions.”
TruGrocer FCU is a nationwide credit union based in Boise, Idaho. Prior to its TIP charter in 2008, it had served the employees of the Albertsons national grocery store chain since 1965. TruGrocer now serves the industry nationwide.
“TruGrocer had been a single sponsor credit union since inception,” CEO Phyllis Thomason Adkins said. “When it lost its sponsor due to sponsor acquisition, the board decided that the industry charter was more suitable for the credit union’s nationwide membership.” Rather than initiating the TIP charter as a growth strategy, it was one of necessity.
“The TIP Charter allowed us to diversify,” Adkins shared, “but growth has actually been less, percentage wise, than when we were a single sponsor.”
Adkins added that she ultimately sees the charter as beneficial, with the greatest positive being “that the CU continues to do what it does best—serve grocery-industry employees. There hasn’t been a negative aspect of having a TIP over having a single sponsor.”
Firefighters First is a nationwide credit union based in Los Angeles, which had served the firefighting community in California since 1935. In 2017, the credit union received a TIP Charter to serve members of the firefighting community across the country.
“We wanted to continue to grow as an organization, stay true to the firefighting profession, and determine how to best mitigate risk from a concentration perspective,” Kelly Ramsay, senior vice president of marketing, said. “We kept true to our exclusive SEG—paid, professional firefighters—but we are now able to serve firefighters nationally.”
Since the charter, Firefighters First has grown its membership by an average of 10% annually. In the last year alone, the credit union added more than a hundred new fire departments and 5,000 new members. “Today we are close to $1.5B in assets and have over 49,000 members,” Ramsay explained. “We have members in every state, and are currently serving over 650 fire departments nationwide.”
The shift has not been without its challenges and has obviously led to the need for a new overall approach. “There are some things we can do now under the federal charter that we couldn’t do under the state framework and vice versa,” Ramsay emphasized. “We are learning how to become local as we grow nationally.”
Still, Ramsay said, the benefits far outweigh any negatives. “We have been able to form business partnerships to offer lending products, insurance, etc. in every state…The disadvantages are minor from our perspective.”
Each of these three credit unions highlights the positive effect a TIP Charter can have on an institution looking to expand or diversify its field of membership, while remaining true its original mission and area of expertise. Whether across one state or the entire country, the TIP is clearly making an impact for credit unions and consumers alike.
Field of Membership Expansion
