Field of membership expansion: A high‐leverage growth strategy for small and mid-sized credit unions

November 7, 2025

by Scott Butterfield

For many small and mid-sized credit unions that carry a mission to serve underserved or low-income communities, the question of “how do we grow?” is front and center. Growth is not just about adding branches, increasing assets, or merging; it is about expanding your reach, deepening your mission, and leveraging your strengths. One strategy that deserves renewed attention is expanding the field of membership (FOM) into underserved and rural areas.

Why FOM expansion matters

First, expanding into underserved or rural geographies allows your credit union to access new membership pools that are aligned with your mission and often less contested by large institutions. According to the NCUA, federal credit unions with a multiple-common-bond charter may include in their FOM “underserved communities.”

For low-income‐designated credit unions, reaching into areas with unmet financial service needs can deepen your impact, diversify your portfolio, reduce dependency on saturated markets, and strengthen your long-term relevance. And critically, this doesn’t necessarily require huge upfront investments in data analytics, new technology, or new lines of business—you’re leveraging your core strengths of community trust, service orientation, and mission alignment.

The NCUA framework in a nutshell

As your board and leadership team consider this pathway, it’s helpful to understand the key steps and criteria laid out by the NCUA for underserved area additions.

1. Identify the area that qualifies

According to the NCUA’s guidance on “Expanding Service to Underserved Areas,” a federal credit union must propose an area that qualifies as a “local community, neighborhood, or rural district.” That area must also be eligible as an “investment area” under the Community Development Financial Institutions Fund (CDFI Fund) criteria (i.e., showing economic distress). It must be “underserved by other depository institutions.” Here is the free link to the CDFI Mapping Tool to help you get started with your due diligence.  

2. Demonstrate significant unmet need

You’ll need to document that the area has “significant unmet needs for loans or for one or more of the financial services credit unions are authorized to offer.” This might include using payday lenders or check cashers, or having limited access to traditional banks.

3. Show you can serve the area

Your business plan must include how your credit union will deliver products and services in that area—including how people will join, what outreach will occur, and how service delivery (shared branch, mobile unit, online, etc.) will work. A crucial element is a “service facility” in the area: a place where deposits are accepted, loan applications can be submitted, and disbursements made (ATMs alone won’t qualify).

Why small/mid-sized credit unions should consider it

Here are several reasons why this strategy merits consideration:

• Mission‐alignment and differentiation: If your credit union already serves low-income, underserved or rural markets, expanding into geographic areas with similar demographics can amplify your purpose and strengthen your brand. You’re not chasing “everyone” but extending your reach to “more of those who need us.”
• Less competitive pressure: Urban markets are crowded; rural and underserved areas often have fewer alternatives, increasing the likelihood of gaining market share and building loyalty.
• Balance and diversification: Adding underserved or rural pockets can diversify geographic concentration risk and expand your deposit base or loan opportunities in areas less correlated with your current market.
• Leverage the benefit from the low-income designation: If you are already designated as a low-income credit union, you may have access to additional programs and grants (e.g., NCUA’s CDRLF grants under “Underserved Outreach”). NOTE: The round is currently OPEN. We strongly recommend that Community Development-focused credit unions apply for the Underserved Community grant of $50,000.  
• Scalable with modest incremental investment: Because small credit unions already have online/mobile banking capabilities, the incremental cost of reaching an adjacent underserved area may be relatively modest compared with building a wholly new branch network.

A word of caution: Due diligence matters

While the process is relatively streamlined compared to some growth initiatives, this is not a stamp-and-go strategy. Here are some cautions:

• Do not skip the homework: Even though the NCUA framework is straightforward, you still need to verify that the area meets “investment area” criteria and is underserved. Skipping this opens the risk of application delay or denial. Use third‐party data (Census, ACS, CDFI Fund, depository institution facility counts) rather than relying solely on vendors.  Make sure you are not paying for more than you need for your plan.
• Validate service delivery feasibility: Just because an area qualifies doesn’t mean you have cost‐effective delivery. Evaluate whether you need a physical branch, a shared branch, a mobile unit, or whether your current digital platform will suffice. Understand incremental staffing, marketing, regulatory, branding, and operational costs.
• Be sure the cost fits the size/growth opportunity: For smaller credit unions, especially, if the added population is modest and doesn’t offer scale, you don’t want your growth strategy to turn into a cost center. Pay attention to how many new members/loans/deposits you realistically can or will attract.
• Control scope creep: A vendor may pitch “let us help you expand everywhere” and charge you upfront consulting, data, design work, etc. But you want to ensure that you’re paying only for meaningful incremental value: i.e., an underserved or rural area with proven opportunity, not just because “we can add this area.”
• Monitor after approval: Once the expansion is live, the NCUA may require periodic service status reports to show that you’re meeting the needs of the area and maintaining a facility or equivalent service in that area.

Practical steps for your leadership team

Here’s a practical checklist for credit unions considering this growth pathway:

1. Board discussion: Bring this strategy to your board: how does serving underserved/rural geographies fit your mission and growth targets?
2. Screen potential areas: Use publicly available data (Census, ACS, CDFI Fund “investment area” lists) to identify a handful of adjacent or nearby geographies that appear to qualify.
3. Run rough pro forma: Estimate the incremental cost (facility/branch/shared branch, marketing/outreach, staffing, digital onboarding, regulatory) vs. likely incremental membership/loan/share growth over, say, three years.
4. Engage the vendor/consultant carefully: If you hire outside help, ensure the scope is limited to data analysis required for the scope of work, application support, and a business plan. Avoid paying large retainers for “data analysis” before you commit.
5. Prepare application: Document the area’s qualification, your business plan, service delivery plan, how you will reach and serve new members, and metrics for tracking success. The NCUA’s guidance describes the required elements.
6. Operational readiness: Make sure your systems, staffing, and delivery channels are ready (or can be ready) to serve the new area, including membership onboarding, deposit services, loan originations, outreach/marketing, etc.
7. Track, refine, and report: After approval, track how many new members are from the added area, their behavior, cost‐to‐serve, and the ROI. Adjust your strategy as needed and document your progress for regulatory and board review.

Final thought

For mission-driven credit unions, especially those designated as low-income or serving underserved populations, expanding your FOM into underserved and rural areas offers more than just growth—it provides an opportunity to deepen your relevance and impact. The regulatory pathway is well-defined, the competitive environment in many rural/underserved markets is less intense, and the potential for meaningful community service is strong.

Yet this is not a panacea. Growth must be disciplined, aligned with your capacity, and rooted in sound analysis. By focusing on underserved/rural geographies where the needs intersect with your mission and service capability, your credit union can amplify its community impact and financial growth simultaneously.

If your credit union is looking for an organic growth trajectory that stays true to your purpose, consider bringing underserved area FOM expansion into your strategic conversation.

For guidance, reach out directly to the NCUA CURE (Field of Membership Support) Office, [email protected]. This is the inbox specifically used for FOM, underserved area, and rural district questions. Phone: (703) 518-1150 (CURE main line), or reach out directly to me, [email protected], or Tom Sakash at [email protected].