Minnesota group earns first-ever provisional charter from NCUA

The regulator granted a federal charter and share insurance fund coverage to Tribe Federal Credit Union in Minneapolis.

Tribe is the first federal credit union to receive a charter under the NCUA’s provisional charter pilot initiative.

Historically, groups interested in organizing new credit unions had to find a way to raise the capital required to implement their business plans before they could obtain a charter.

But, in many cases, investors that provide the capital have been hesitant to make a firm commitment until an organization had an approved credit union charter in hand.

So the NCUA last year rolled out the provisional charter – an option in situations where the charter is the last piece a group needs to finalize its capital requirements.

Under the program, the organizers would provide a capital funding plan and agree to secure the necessary funding commitments within 12 months.

A provisional charter does not authorize a credit union to accept member deposits or originate loans until the credit union obtains its targeted level of donated capital, the regulator said.

The NCUA said the provisional charter pilot is one of several recent measures it has taken to modernize and improve credit union chartering.

Tribe Federal Credit Union is a low-income-designated credit union primarily serving people who live, work, worship, or attend school in Minneapolis as well as serving those participating in programs to alleviate poverty or distress within the city.

The credit union plans to offer members basic savings and lending services, including auto loans and personal loans.

Tribe Federal Credit Union’s charter became effective on May 22.

It is the second federal credit union chartered in 2024. The NCUA in March granted a federal charter and share insurance fund coverage to New Jersey State PBA Federal Credit Union in Woodbridge, New Jersey.

“A provisional charter is an excellent solution to the chicken-and-egg chartering problem, but I also know that it’s hard to raise capital even if you have a charter.”

 – Todd Harper

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