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RALEIGH – Legislation to improve financial services offerings in rural and underserved communities is currently being discussed in the North Carolina General Assembly.

House Bill 187 would help eliminate barriers for established credit unions to help these communities.

Locally, portions of the Roanoke-Chowan area are considered “financial deserts” due to the dwindling number of traditional banks. Currently there are seven traditional banks in the four counties of the Roanoke-Chowan. Bertie, Gates, and Northampton counties are served by just one traditional bank each, while Hertford County has four.

Meanwhile, the same four counties combine to have an equal number (seven) of credit unions.

In the past 11 years, traditional banking institutions have shut down 646 branches in North Carolina, or one of every four, with the largest share of closures coming in rural and less-wealthy counties. That’s according to data from the Federal Deposit Insurance Corporation, which insures lenders and tracks bank locations.

Over the last 25 years, traditional banks have closed branches in Ahoskie, Askewville, Aulander, Colerain, Conway, Gaston, Harrellsville, Hobbsville, Lewiston-Woodville, Rich Square, Roxobel, Seaboard, Sunbury, Windsor, Winton, and Woodland.

House Bill 187 would let credit unions offer financial services to residents who live in areas without a nearby bank branch. Under current state law, people typically must be part of a defined group – like working for the same employer – to qualify for membership at a credit union, limiting who credit unions can serve.

“For-profit banks are leaving rural parts of the state because there just isn’t enough money there to justify maintaining branches,” said Dan Schline, CEO of the Carolinas Credit Union League. “Credit unions have the right model to serve these communities because credit unions are beholden to their members, who are all part-owners. Credit unions want to open more branches in these underserved parts of the state.”

House Bill 187, an act to update the state statutes governing credit unions, was filed on Feb. 24. The proposal passed its first reading on Feb. 26 and was sent to the House Finance Committee.

This is the second time in the last few years that credit unions have pushed for these reforms. Similar legislation passed the N.C. House of Representatives in 2023 by a wide margin, but it did not receive a hearing in the North Carolina Senate before that legislative session ended in 2024.

According to the website cuinsight.com, state laws governing state-chartered credit unions haven’t been updated since 1975, before computers and the internet. Outdated laws create administrative hurdles for credit unions, and some of them are costly. A modernization of North Carolina’s laws would allow credit unions to serve their members more efficiently.

Like banks, credit unions accept deposits, offer loans, and provide other financial services. Unlike banks, credit unions are not-for-profit cooperatives, which means every depositor is an equal part-owner of the credit union.

Credit unions return excess revenues to their members through higher savings rates, lower loan rates, and fewer fees.